Priceline Tries to Negotiate an Earnings Beat

NEW YORK (TheStreet) -- The economic downturn has hit companies far and wide, but perhaps none more so than Priceline.com (PCLN).

The Norwalk, CT.-based online travel company generates a significant portion of its revenue from Europe, which could not only affect earnings, but third-quarter guidance as well, says Piper Jaffray analyst Michael Olsen.

Olsen is expecting priceline to report upside to earnings for the second quarter, but expects conservative domestic and international bookings guidance for the third quarter. "Additionally, Q3 EPS guidance will likely be below consensus (Street currently at $12.95) due to the rapid depreciation in the USD:EUR FX during July, but we expect investors will focus on FX neutral bookings growth," Olsen wrote in his report. He rates priceline "overweight" with a $811 price target.

Analysts surveyed by Thomson Reuters expect priceline to earn $7.36 per share on $1.35 billion in revenue for the second quarter.

Even with troubles in Europe, though, priceline is expected to show strong growth, thanks to the boom in online travel and consumers being more cost-conscious than ever. That sentiment has shown up in the company's shares, which have gained 44.3% year-to-date, far outpacing the 15.33% return in the Nasdaq, as well as the S&P 500.

PCLN data by YCharts

"We expect strong 2Q results given favorable travel industry dynamics and solid performance by Expedia and hotels overall," wrote JPMorgan analyst Doug Anmuth in a research report. "We expect Priceline to be the biggest beneficiary of stable/rising ADRs in Europe, despite ongoing macro concerns in the region." Anmuth lists priceline as one of his two top Internet stocks for 2012, based on Booking.com's continued gains in Europe. Amazon.com (AMZN) is the other top Internet stock. He rates priceline "overweight" with a $770 price target.

Anmuth also cited strong second-quarter results from Expedia (EXPE) as reason for his optimism. "Marriott, Starwood, and Hyatt reported solid global RevPAR [revenue per available room] growth driven by strength in N.America and Asia, with solid travel trends in Europe," he noted. "Hotel guidance for 2H12 generally remained stable, with expectations for a positive lift from the London Olympics in 3Q, though it's less clear that Priceline will benefit materially from the event."

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--Written by Chris Ciaccia in New York

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